Billions of dollars have been made in the last decade thanks to the world of e-commerce. That number pales in comparison to the true value of the real commodity behind the commerce: the data.
E-commerce companies have been collecting data for years. Once relegated to rudimentary algorithms that tracked purchases and made personal recommendations based on that information, today’s consumer data is pulled from numerous channels and pooled into an amalgamated, and yet surprisingly precise, customer profile.
Not only that, but this data can be shaped, sifted and modeled to not only glean crucial information about your prospects but also predict the actions they’ll take, the response that various campaigns or initiatives may have and much more.
Over time, this allows you to build a more refined and focused picture of your customers. As you might expect, this information is virtually priceless, and yet many have tried to put a concrete value on this data.
In doing so, it also becomes more commodity-like: able to be bought and sold by and between advertisers, marketers and companies alike. Because the frontier of e-commerce customer data is so new, it understandably comes with its own set of complex challenges and difficult questions that don’t have an easy or quick solution.
Image via Blast Analytics and Marketing
The Importance of Data Valuation
An article by MIT reveals the three main reasons why organizations want to put a value on their data, most notably:
- The ability to directly monetize the data
- The ability to manage internal investments and
- The ability to leverage the data for mergers and acquisitions
Perhaps the most pressing and morally-grey area is in the first of these -- the ability to monetize the data. From the data collection side, there’s a lack of understanding about how the data is priced, but perhaps even more mission critical is the issue of maintaining accountability.
The Morally-Grey World of Data Collection and Usage
For this reason, there are rules in place that govern how data can be collected, stored, used and even disposed of. The regulations governing data depend upon the geographic being served, the industry (or industries) involved and much more.
Being a Good Steward of Digital Data
This is why it’s a good idea to be socially responsible with customer data and avoid the morally-grey areas as far as data collection and usage are concerned.
That means taking customer feedback into account and giving them the freedom and choice to determine how they wish to be contacted and when. This also means that you have to keep in mind that your customer has chosen you over all of your competitors or the alternatives. They’ve placed a degree of trust in you, so repay that trust by letting them choose what and how to authorize your collection and use of their data.
And this goes beyond, for example, allowing users to accept cookies on your website. It applies to loyalty programs, apps, mailings and more. It’s understandable that users are protective of their data, but by letting them know the benefits they receive by opting to share their information, you’ll be demonstrating that your company is not only a responsible steward of customers’ digital data, but that you are also transparent and open about the data collection and sharing process.
An Eye to the Future of Data-Driven Marketing and Analytics
Expect that in the near future, algorithms, predictive modeling, and other advances will continue to be further condensed, refined and focused. Is it possible to become too focused on data to the exclusion of everything else? That may well be a bridge that we’ll have to cross in the future, as data becomes the currency through which all of our interactions with companies are based.
But for now, it’s important to realize both the power and pull that data-driven marketing, as well as its responsible usage, have on customers. Used incorrectly or with inexperience as its key driver, it can create repercussions that are hard to untangle. But if used respectfully and responsibly, it creates a cycle of credibility, trust and lasting goodwill, which cannot be bought and have a value too immense to put a number on.